169 OBUSAN VS PNB

FACTS:
respondent Philippine National Bank (PNB) hired petitioner Amelia R. Obusan (Obusan), who
eventually became the Manager of the PNB Medical Office.At that time, PNB was a governmentowned or controlled corporation
On May 27, 1996, PNB was privatized
Consequent to the privatization, all PNB employees, including Obusan, were deemed retired from the
government service
The GSIS accordingly paid petitioners retirement gratuity in the net amount
of P390,633.76. Thereafter, Obusan continued to be an employee of PNB
Later, the PNB Board of Directors, through Resolution No. 30 dated December 22, 2000, as
amended, approved the PNB Regular Retirement Plan (contains provision that 60 years old is the
retirement age) PNB informed its officers and employees of the terms and conditions of the PNB-RRP,
along with its implementing guidelines.
PNB informed Obusan that her last day of employment would be on March 3, 2002, as she would
reach the mandatory retirement age of 60 years on March 4, 2002
Obusan filed before the Labor Arbiter a complaint for illegal dismissal and unfair labor practice,
claiming that PNB could not compulsorily retire her at the age of 60 years, with her having a vested
right to be retired only at 65 years old pursuant to civil service regulations.
LA, NLRC and CA dismissed her petition.
ISSUE: Whether or not the lowered age of retirement from 65 to 60 based on the CBA is contrary to
law? NO
HELD:
Under Art 287, the retirement age is primarily determined by the existing agreement or employment
contract. Absent such an agreement, the retirement age shall be fixed by law. It mandates that
the compulsory retirement age is at 65 years, while the minimum age for optional retirement is set at
60 years. Moreover, Article 287 of the Labor Code, as amended, applies only to a situation where (1)
there is no CBA or other applicable employment contract providing for retirement benefits for an
employee; or (2) there is a collective bargaining agreement or other applicable employment contract
providing for retirement benefits for an employee, but it is below the requirement set by law. The
rationale for the first situation is to prevent the absurd situation where an employee, deserving to
receive retirement benefits, is denied them through the nefarious scheme of employers to deprive
employees of the benefits due them under existing labor laws. The rationale for the second situation is
to prevent private contracts from derogating from the public law
It cannot be said that the PNB-RRP is a retirement plan providing retirement benefits less than what
the law requires. In fact, in the computation of the employees retirement pay, the plan factored what
Article 287 requires. (did not include computation of benefits)
Moreover, the PNB-RRP also considered the effects of PNBs privatization, as it also provided for
additional benefits to those employees who were not qualified to receive the GSIS Retirement Gratuity
Benefits
Retirement plans allowing employers to retire employees who have not yet reached the compulsory
retirement age of 65 years are not per se repugnant to the constitutional guaranty of security of
tenure. By its express language, the Labor Code permits employers and employees to fix the
applicable retirement age at 60 years or below, provided that the employees retirement benefits under
any CBA and other agreements shall not be less than those provided therein. [25] By this yardstick, the
PNB-RRP complies.
However, company retirement plans must not only comply with the standards set by existing labor
laws, but they should also be accepted by the employees to be commensurate to their faithful service
to the employer within the requisite period
The records show that PNB informed all of its officers and employees about it, complete with its terms
and conditions and the guidelines for its implementation. Then, the PNB-RRP was registered with the

BIR and, later, was recognized by the Philnabank Employees Association in the CBA it entered with
PNB.
With the information properly disseminated to all of PNBs officers and employees, the PNB-RRP was
then opened for scrutiny. The employees had every opportunity to question the plan if, indeed, it
would not be beneficial to the employees, as compared to what was mandated by Article 287 of the
Labor Code.
With respect to Obusan and the PNB Supervisors and Officers Association, of which she was the
President when she was compulsorily retired, there is nothing on record to show that they expressed
their dissent to the PNB-RRP. This deafening silence eloquently speaks of their lack of disagreement
with its provisions. It was only at the time that she was to be compulsorily retired that Obusan
questioned the PNB-RRPs provision on compulsory retirement age.
Besides, the SC already had the occasion to strike down the added requirement that an employer
must first consult its employee prior to retiring him, as this requirement unduly constricts the exercise
by management of its option to retire the said employee. Due process only requires that notice of the
employers decision to retire an employee be given to the employee
WHEREFORE, the petition is DENIED. The assailed Decision dated September 21, 2007 and the
Resolution dated January 8, 2008 of the Court of Appeals in CA-G.R. SP No. 96918
are AFFIRMED. No costs.
SO ORDERED.